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411. Sustainable business regardless of the social system

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Coop Name: Buyan-Undral Cooperative
City: Dariv soum N° of Members: 312
Country: Mongolia Year of formation: 1993
About this coop:

“Buyan-Undral” primary agricultural cooperative is the one of the largest member cooperatives of National Association of Mongolian Agricultural cooperatives. The Mongolian Government and Local Government have valued the activities of Buyan-Undral highly and granted many awards and premiums to this cooperative, including in 2000 “Best cooperative” award of National Association of Mongolian Agricultural cooperatives /NAMAC/, in 2003 “National best cooperative” award, Ministry of Food, Agriculture and Light Industry of Mongolia /MOFALI/, in 2004 “Agricultural model cooperative” of NAMAC, In 2005 “Top leading entity” of Govi-Altai province, Province Governer’s office, and in 2007 “Top leader of Agricultural sector” of Govi-Altai province.

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Mongolia boasted 225 large collective farms before the Democratic revolution of 1990. From that point on most of the collective farms were privatised and then collapsed.

The collective farms that did survive this process were few and each re-organised into a co-operative-based model.

The largest of these primary agricultural co-operatives is called Buyan-Undral and is also one of the largest member co-operatives of the National Association of Mongolian Agricultural Co-operatives.

The “Undral” collective farm was privatized 36 years after its establishment. Livestock, shelter for livestock and the stock in its warehouse was privatized and ownership moved to the member herders, but real estate, including for example an office building and a warehouse remained and these assets formed the basis of the new modern cooperative “Buyan-Undral”.

“Buyan-Undral” primary cooperative was established in 1993 in Dariv soum of Govi-Altai province and has 312 members. This is the one of the very successful cooperatives which established on the base of former collective farm and re-organized its activities as a cooperative, while keeping all its membership. Dariv soum is a very remote area of western region of Mongolia, approximately 1400 km from the Ulaanbaatar capital city and 280 km from the province’s center with poorly developed infrastructure including no concrete roads to reach the village and no electricity. In spite of the region’s underdevelopment, the “Buyan-Undral” cooperative is successfully widening its activities and members’ business scope to become the largest and most powerful agricultural cooperative in Mongolia.

Today the cooperative has office buildings, land, a shopping center, warehouses, an hotel, a bakery, green houses, a furniture making plant, a pickling and canning shop, a canteen, a vehicle, a wool pressing machine and other equipment.

The members’ obligation to the cooperative is to market at least 60% of livestock output to the cooperative. If they fulfill this obligation then the cooperative store gives them a 10% discount. The cooperative buys members’ livestock output by market price and does the primary processing to market.

Price compensation, which the cooperative provides to its members, is the cooperative business which buys members’ agricultural outputs and store in warehouses after primary processing and then markets when the season is over and prices are higher. This part of the cooperative’s activity is encouraging members’ participation and supporting their income.

The cooperative has designed a board which informs members of their obligations, price compensation and dividends distributed, members’ share capital, which is open for the observation of any member. Also this board informs members of the cooperative’s activities so members have a transparent view of its activities.

The cooperative’s “Sutai” shopping center is one of the biggest retail stores in the region and serves members and local people. Members and herders can order the goods they need at the shopping center and it supplies all consumer goods to meet the local demand. The cooperative members’ income is particularly seasonal, cashmere is produced in the spring, dairy products and wool in summer, and winter is peak slaughtering season. Most of the members don’’t have cash but they always can come to “Sutai” shopping center to purchase needed goods by exchanging livestock outputs and same time members’ can make delayed payments to the store. Here the members’ trust plays very important role, although so far there were no incident of non-payment for the goods they had purchased in advance.

“Buyan-Undral” cooperative is a mere example of the cooperative identity that changes the lives of many people and communities, no matter where they located, by offering the services to improve their life quality and enhancing the rural development.

Author of this story
Kate Askew
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